Will the Bullish Cycle Extend into April after Molybdenum Prices Hit New High in March?

SHANGHAI, Apr 1 (SMM) - Sentiment in the Chinese molybdenum market sentiment became quite bullish in March as the bid prices of molybdenum concentrates kept rising, which allowed molybdenum prices to hit new highs. Prices of mainstream product ferromolybdenum even hit 180,000 yuan/mt, setting a new high in 10 years.

However, SMM believes that there will be limited room for further price increases in April, and the prices will fluctuate rangebound instead. The main reasons are as follows.

First of all, bids from steel mills may fall in April after a substantial increase in March. According to SMM statistics, bid volumes from steel mills totalled 16,000 mt in March, up 281% MoM. Many large steel mills have finished stocking up ferromolybdenum and may slow down purchases this month in the face of current high prices and financial pressure. some market participants predict that bid volumes from steel mills may fall to 10,000-12,000 mt this month.

Secondly, high prices and negative economic situation have put many steel mills under big financial pressure.  This has forced some steel mills to lower operating rates.

Continuous rise in domestic molybdenum prices and downward corrections in international molybdenum prices have narrowed the price gap between the two. This, coupled with high sea freight, has closed the export window, which will put certain downward pressure on the domestic molybdenum market.